IIA Standards Briefing
CUAV 2011
Williamsburg Virginia
May 23, 2011
Your Instructor
Dr. Doug Ziegenfuss
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Chair and Professor
Department of Accounting
Constant Hall, Room 2157
Old Dominion University
Norfolk, Virginia 23529-0229
Office 757-683-3514
FAX 757-683-3258
E-Mail dziegenf@odu.edu
Ground rules!
(Continued)
• PLEASE TURN OFF YOUR CELL PHONES
AND PAGERS!
• PLEASE GIVE ME YOUR HONEST
EVALUATION!
• I AM CONSTANTLY TRYING TO
IMPROVE MY PRESENTATIONS!
Two Ways to Present This Material!
• The first is to merely go through the standards
– line by line – word by word.
• Boring, Boring, Boring!
• The second is to quickly summarize the
framework and through case studies and
exercises show how it can improve your
practice!
• Who chooses the first and who chooses the
second?
The Second Approach
Wins in a Landslide!
Issue Number 1
• Why comply with the IIA Standards?
• Comments Please!
International Professional
Practices Framework (IPPF)
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Notice the Word International!
Notice it is a framework!
The IPPF comes in many forms
Free on line at:
http://www.theiia.org/guidance/standardsand-guidance/
International Professional Practices
Framework (IPPF)
The International Professional Practices Framework (IPPF) is the conceptual
framework that organizes authoritative guidance promulgated by The
Institute of Internal Auditors. IPPF guidance includes:
Mandatory Guidance
Definition of Internal Auditing
Code of Ethics
International Standards for the Professional Practice of Internal Auditing
Strongly Recommended Guidance
Position Papers
Practice Advisories
Practice Guides
New Definition of Internal Auditing
• An independent, objective assurance and
consulting activity
• designed to add value and improve an
organization’s operations.
• It helps an organization accomplish its objectives
• by bringing a systematic, disciplined approach
• to evaluate and improve
• the effectiveness of risk management, control,
and governance processes.
IIA Code of Ethics
• Codes of Conduct face a dilemma?
• Can anyone tell me what it is?
• Codes of Conduct have to be changed or they
become obsolete and irrelevant.
• Let’s go through the IIA Code very quickly.
• Please refer to your handout.
• Then we will do a couple of exercises.
Ethics CaseConflict of Interest
• Hawkins, an internal auditor, was performing
an audit of the marketing department.
• Bailey, the VP for marketing, asked him to join
him for dinner at his club to discuss some
elements of the audit.
• Hawkins agreed.
Ethics CaseProfessional Competence
• Howard, an internal auditor, was under
pressure to complete an audit on the
disposal of surplus.
• He had recently come upon a transaction
that could have been an indication of a
serious problem.
• Due to the time pressure, he did not
investigate the problem or record it in his
workpapers.
Ethics CaseMorality and Dignity
• Green, an internal auditor, was sent to a
training seminar in another city.
• Green interviews for another job and
misses an afternoon session of the seminar.
The International Standards for the
Professional Practice of Internal
Auditing
• Minimum Performance Standards
• Attribute Standards
• Performance Standards
Attribute Standards
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1000 – Purpose, Authority, and Responsibility
1100 – Independence and Objectivity
1200 – Proficiency and Due Professional Care
1300 – Quality Assurance and Improvement
Program
Performance Standards
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2000 – Managing the Internal Audit Activity
2100 – Nature of Work
2200 – Engagement Planning
2300 – Performing the Engagement
2400 – Communicating Results
2500 – Monitoring Results
2600 – Resolution of Senior Management’s
Acceptance of Risks
Let’s Look at some issues and apply
the International Standards for the
Professional Practice of Internal
Auditing!
Internal Audit Manual
• How many audit shops have these?
• Are they required by the standards?
• Yes, see 2040. Policies and Procedures.
The Charter
• How many folks have these?
• Why have them?
• What should go into them?
THE CHARTER
• SIMILAR TO ENGAGEMENT LETTER
• DOCUMENTS UNDERSTANDING BETWEEN
INTERNAL AUDIT AND MANAGEMENT
• MARKETING TOOL
THE CHARTER (CONTENTS)
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PURPOSE
NATURE AND DESCRIPTION OF INTERNAL AUDITING
ORGANIZATIONAL STATUS OF INTERNAL AUDITING
REPORTING RELATIONSHIPS
SCOPE OF INTERNAL AUDITING
RESPONSIBILITIES AND AUTHORITY
FRAUD
PROHIBITED ACTS
SIGNATURES AND APPROVAL
Risk Assessment and Audit Scheduling
• How many folks do this?
• How many folks are happy with their current
procedure for doing this?
RISK ASSESSMENT
• DIVIDE ORGANIZATION INTO AUDITABLE UNITS
• DETERMINE RISK FACTORS
• ASSESS AUDITABLE UNITS ACCORDING TO RISK
FACTORS
• RANK AUDITABLE UNITS BY TOTAL RISK FACTORS
• SCHEDULE AUDITS
Quality Assurance!
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Supervision
Internal Review
External Review
TQM/Benchmarking
Performing the Individual Audit
Assignment!
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Audit Planning
Audit Fieldwork
Audit Reporting
Audit Follow-up
The standards give guidance on each of these
issues.
Lastly!
• What does it mean to say that your internal
audit function, “Conforms with the
International Standards for the Professional
Practice of Internal Auditing?”